Learn how to maximize your probability of success when opening a franchise business.
With any business venture, there are inherent risks involved that can vary based on the industry, investment, competition and a plethora of other factors. As someone with an entrepreneurial spirit, risk is unavoidable – but you can maximize your probability of success when opening a franchise business by familiarizing yourself with (and avoiding) some common mistakes.
What are the potential pitfalls of starting my own franchise?
Assuming a franchise is a sure bet
A common misconception in franchising is that the business will succeed because of the brand’s name or reputation, without having to put in a lot of extra work. When starting a franchise, you can’t assume you’ll be able to just sit back and watch the profits roll in. In many ways, a franchise business is just like any other startup business. Be prepared to spend time and effort getting your franchise established and maintaining a high level of dedication to keep the business running smoothly once your doors are open.
Investing in a franchise model doesn’t automatically make you a business expert – you must still learn aspects of accounting, finance, marketing, customer service, human resources and basic day-to-day operations. You must hold yourself personally responsible for the business’s growth and success.
Opening a business requires hard work and determination. Finding a franchise partner that can help lessen the initial workload can make all the difference. You want to make sure there is a robust training program in place to help you understand all of the different parts of the business. For example, The UPS Store offers a comprehensive training program to get franchisees started.
Failing to thoroughly research your investment
It’s crucial to fully research your franchise options before making an investment. Look at different industries, markets and the competitive landscape. Gather information from a variety of sources to help you make your decision. You want to be confident that the venture is right for you. As an entrepreneur, you should select a business that aligns with your interests and skillset. You want to identify a location that has a large pool of potential customers nearby. Determine how long it will take you to see a return on investment and whether that plan aligns with your long term goals.
It can also be beneficial to speak with other franchise owners to get a firsthand account of what owning a franchise is like. Talk to franchisees from different brands that fit into a particular category or industry that you’re interested in. Find out what they’ve learned and what they might do differently if given the chance.
Reputation is a factor to consider as well. Does the franchise have a well-known brand name? What are they known for? Are there significant positive or negative reviews available? How long have they been in business? What stage of business is the brand in? Are they still experiencing growth?
Choosing the wrong franchise system
With so many franchising options available today, choosing the right one can be quite difficult. It can be tempting to select a new brand with seemingly untapped potential, but you would forego the tried-and-true principles and equity of an established infrastructure.
How quickly has the franchise grown? How saturated are the franchise locations within a given area? When choosing a franchise, it’s important to consider their track record of performance, reputation and opportunity for training and development.
Many franchise systems, like The UPS Store, provide ongoing support and training to help franchisees grow their business. Make sure to factor in these added benefits when deciding on a franchise brand.
Not utilizing the system
While many prospective franchise owners bring a wealth of business acumen and experience to the table, when it comes to actually running a franchise business, it’s best to rely on the established practices set out for you. Trying to tackle everything on your own not only takes a personal toll but it can also be counterproductive to your larger business objectives. Trust the systems and processes that are in place. After all, it’s what you’ve invested in.
A major benefit of a franchise system is having a framework laid out from selecting a site, to securing financing, to managing day-to-day operations – and a support system for when and if you have questions or need support in dealing with an issue. It’s likely that another owner within the system has had a similar experience and can share best practices.
Although opening a franchise business can certainly be challenging, it can also be very rewarding to be your own boss. If you’re ready to take the next step toward becoming a franchise owner, make sure to avoid these common mistakes and increase your odds of success.